Europeans aren’t all that excited to give more of their hard-earned money to the powers that be. For proof, look no further than the recent anti-tax riots carried out by the Yellow Jackets.
Showing French President Emmanuel Macron they were not going to back down, rioters eventually got what they wanted and Macron was forced to announce he would cut taxes instead of increasing them. But despite what transpired in France, Austrian Chancellor Sebastian Kurz seems to believe Austrians won’t mind having their internet and tech service providers pay more to the government.
Perhaps he's honestly unaware that taxing them more would, undoubtedly, make their services and products more costly to the Austrian consumer. But then again, he might just be aware of this minor issue but choosing to go on with the plan anyway.
Claiming that Google, Apple, and Facebook aren’t paying their “fair share,” Kurz announced his country would be following in France’s footsteps, imposing a digital tax on large tech companies. This announcement came after the European Union failed to come up with its own digital-tax plan.
Going into effect in 2020, the digital tax would impact large tech companies, which includes Amazon. However, details on the plan are still murky, as Kurtz said Finance Minister Hartwig Loeger is still “working out the details.”
The notion that large tech companies aren’t paying enough comes from the European Commission, which disclosed that companies like Google and Facebook pay less than half the tax other large companies do or about 9 percent on average.
“The aim is clear — to tax companies that generate huge profits online, but pay hardly any tax on them, such as Facebook or Amazon,” Kurz explained.
Prior to Austria’s announcement, France tried to push a digital tax on the entire European Union but failed to get enough member states to back the idea. Shortly after, the country announced it would be implementing a digital tax on its own.
The new rule, which already took effect on January 1, could raise France €500 million (about $570 million) this year alone at the expense of the French consumer.
Taxation Hurts People Like You and Me, Not Big Corporations
While the Yellow Jackets were standing against proposed taxes meant to combat climate change, they might as well have revolted against additional taxes on large job creators and service providers such as the digital mega-firms. After all, imposing greater taxes on these companies will translate into more expensive products.
When speaking against the plan to tax tech firms, Irish representatives explained that the proposals would go against taxation treaties between European states and other countries. With Europe struggling under President Donald Trump’s newly imposed trade tariffs, the European countries that opposed the digital tax argued that additional taxation could further exacerbate tensions between the U.S. and members of the European Union.
Unfortunately, they didn’t seem too concerned about further exploring this argument. But they did explain that whenever new tariffs or taxes are imposed on companies, the ones who suffer the most are the consumers. European countries should know this, as President Trump’s tariffs raised the costs of materials like steel, prompting companies that rely on the material to wonder whether they can keep up. After all, costlier materials mean more expensive products. And when products cost more, consumers spend their money elsewhere.
While people in France and Austria might not be completely aware that this added tax will actually hurt them in the long run, authorities in those two countries should be reminded that the digital tax is nothing but an additional burden on the consumer; pretending the plan is about fairness will not fly. With the French currently struggling to pay their taxes, which are the highest of all wealthy countries’, it's not far-fetched to believe they will soon wake up to the fact that the digital tax also puts them at a disadvantage.